Property management in Germany: useful tips
1. Work with professionals
When you make a big deal, and buying real estate always is, it is very important to enlist the support of a professional who will defend your interests. And even more so, in an unfamiliar foreign market. Why you need a real estate management partner in Germany, probably, no need to explain. But how to choose it, how to evaluate the professionalism of the company, if you yourself are not a professional, is an important question.
“I would first of all study the recommendations,” advises Regina Borger, CEO of WiP Immobilien GmbH. Look what the company has already done. Ask for contacts of clients who have already used their services. This is the best proof of professionalism.
You can also evaluate the company by their specialization. For example, in Bavaria, about 80 firms offer property management services in Germany. At the same time, many are engaged in everything in a row: sales, tourism, medicine, car rental … I think it is more profitable for the buyer to work with narrowly specialized specialists, because. they know their market better.
And finally, an important speaking parameter is the participation of the company in professional organizations, the Association of Managers and the Society for the Protection of the Rights of Owners. This is an indicator of the solidity of the organization.
2. Study the object before the deal
In the case of Munich, it’s not even about the location or quality of real estate. In the capital of Bavaria, literally everything is rented and quickly sold – apartments and houses, large and small, cheap and expensive, in the center and on the outskirts. The risk of buying illiquid assets that will be idle without an employer is minimal in Munich. But there is a chance to overpay and incorrectly calculate the yield.
“It is important to understand how the price is adequate and corresponds to the market,” says Regina Borger. – When we check an object, we look at its technical condition and location. It is very important what kind of heating and roof are there (the facade is already decorations), what repairs have been carried out and what they plan to do in the future. Be sure to read the minutes of the owners’ meetings over the past few years so that their decisions do not come as a surprise to the new owner.
We also evaluate the economic component of the object. It is necessary to find out what the savings funds are in the house and whether they exist at all, how much the tenants pay for utilities, and if the price is too high, understand why, and of course ask if there are ongoing proceedings in court.”
3. Choose a reliable tenant
What is the main goal of an investor? Of course, make a profit. It is unlikely that anyone is interested in solving the problems of tenants. Ideally, you want to find an employer who will live in an apartment for a long time, regularly transfer money, take care of property and not bother about trifles. If you are buying an already rented apartment, you can see the payment history and the condition in which the apartment is kept. And how to check a new person?
“We evaluate each potential tenant from two positions – solvency and problematic,” says Regina Borger. – How do we check the financial situation of a person? We look at his salary certificates for the last few months. We pay attention to what position he has, how long he has been working there, whether the probationary period has passed. If he used to rent a house, you can ask for a recommendation from the previous owner.
Also in Germany for more than 100 years there has been an organization that collects data on the solvency of individuals, the so-called Schufa (for legal entities – Сreditreform). They work directly with banks, telephone companies – and this is always an indicator of whether a person pays regularly for a telephone. If someone becomes bankrupt, he immediately falls into the Schufa database.
But to understand whether the tenant will give you trouble is more difficult. It must be felt. We try to evaluate the psychological portrait of everyone who comes to the screenings.
For example, you recently rented an apartment. The first to arrive was a German couple, seemingly wealthy, but at the same time they find fault with the little things, looking at every scratch on the parquet. I think not, I don’t want to hand it over to you, you will call me later in the evenings and complain that the garbage container is in the wrong place. I’m not kidding, it really happened.
Then comes a family from India with a small child, and the girl is also pregnant. Four people for a kopeck piece is a bit much, and if you take into account Indian traditions in cooking, then they can potentially “kill” an apartment. They also refused.
As a result, the premises were rented to a single working Chinese who regularly pays and does not cause problems.”
4. Write your lease right
And finally, the most important parameter of investment property is the contract with the tenant. In Germany, many objects are sold already with concluded lease agreements. Those of them where the conditions for the owner are unfavorable, and when sold are cheaper. In this case, it is important to read it carefully and understand what you are going for. If you buy a free apartment for rent, you need to take care of drawing up a competent lease agreement.
“Don’t reinvent the wheel, don’t write contracts yourself,” advises Regina Borger. – In Germany, there is a Society for the Protection of Owners’ Rights, whose lawyers draw up up-to-date lease agreements that take into account all the important points. We, as members of the organization, use them, but you can just go to the store and buy such a document.
In the contract, pay attention to the following points: the amount of the rent, how and when you can increase it, the conditions for terminating the contract, what repairs are carried out at your expense, and which at the expense of the tenant, in what form the security deposit (Kaution) is presented and how it transferred to the new owner.
And it is also very important when renting an apartment to draw up an acceptance certificate, indicate in it all the meter readings and the existing shortcomings. If something is damaged in the apartment when the tenant moves out, he will have to fix it at his own expense.”
The editors of Prian.ru would like to thank WIP Immobilien GmbH and personally Regina Borger for their help in preparing the material.